Blockbuster Video hit hard by financial crisis

NEW YORK — The stock markets had a volatile day following Monday’s meltdown, with the Dow dropping 37.27 points after a few swings into positive territory to settle at 6,726.02, still a 12-year low.

The S&P sank below 700 for the first time, closing at 696.33, down 4.49 points.

Media shares were mixed, with some of the biggest declines belonging to CBS, off nearly 10% to $3.60; GE, down 8% to $7.01; and Blockbuster plunging 77% to 22¢.

Trading in shares for vidtailer Blockbuster had to be halted Tuesday as news that it had sought the advice of a law firm stirred speculation on Wall Street about a potential bankruptcy filing.

With the DVD format having peaked, Blockbuster has been under threat for a while, but the financial crisis has worsened its woes. The company denied that it’s going bankrupt and said the law firm is simply helping with ongoing financial and revenue-generation tasks. But trading of the company’s stock, which reached 10 times normal volume, had to be halted amid fears the rumors could drive the share price to zero.

NBC Universal parent company GE also continued its slide Tuesday, with chief exec Jeffrey Immelt falling on his sword in his annual letter to shareholders.

“Our company’s reputation was tarnished because we weren’t the ‘safe and reliable’ growth company that is our aspiration,” he wrote.

The conglom already is looking at many areas of its troubled finance business that it will jettison, Immelt said.

On the plus side, investors cheered Sony’s management reorg, boosting shares 5% to $17.36. As Blockbuster reeled, Netflix shares rose 6% to $36.36. Even the kicked-around music biz found reason for hope as Warner Music Group gained 5% to $1.76.

Disney, News Corp. and DreamWorks Animation all registered solid gains, though bargain-hunting was a more likely cause than any actual news. Disney rose 2% to $16.36, News Corp. was up 1.5% to $6.09 and DreamWorks gained more than 3% to $19.02.

With the fiscal crisis metastasizing and preoccupying Washington as well as international investors, media execs are facing a dramatically more complex world than that of even a few months ago.

Top media honchos are having to adjust plans constantly as markets move. Credit remains a serious problem, making longer-term and strategic thinking nearly impossible.

It’s enough to make even those who work amid the razzle-dazzle of showbiz become contemplative. Restaurants are quieter. Parties, events, even festivals and conventions don’t have the same insistent pulse.

“In times like these, you do a lot more introspection,” said CBS topper Leslie Moonves during a morning keynote at the Deutsche Bank media confab in Palm Beach, Fla. “You go in every day and you say, ‘All right, what can we do to make our market better short-term and also as we look out over the next few years, what is our business going to become? Who are we? And you redefine yourselves.’ “

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